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Can any savings accounts beat inflation?

Inflation reaches its highest level since September 2013

Now that inflation has reached 2.3% – the highest level since September 2013 – it’s much harder for savers to find an account that pays enough to protect their money from losing value in real terms. 

In fact, when you exclude products that have limited access, only one of the 793 savings accounts on the market can match inflation – and that deal requires you to lock your money up for five years.

No instant-access accounts – and no cash Isas at all – come close to inflation at its current rate. Here we round up the few savings deals that can keep pace with inflation, and list the best of the rest.

Which? Money Compare table: savings accounts and Isas – our tables are updated daily

How to beat inflation

Fixed-rate bonds

Fixed-rate bonds – which require you to tie up your money for a set period – are the only type of account that has been able to keep up with climbing inflation in recent months. But following the latest increase, only one bond can match it.

The five-year fixed-rate account offered by Milestone Savings pays 2.3%, but requires an initial deposit of £10,000 and doesn’t allow further additions during the fixed-term period.

The risk of tying your money up in a fixed-rate account is that rates will rise in the meantime and you’ll miss out on better returns.

Regular savings accounts

Regular savings accounts are a good alternative. The best rates are high enough to outstrip inflation, but unlike fixed-rate bonds or instant-access accounts, you’ll be much more restricted on the amounts you can pay in – maximum monthly deposits range from £250 to £500. What’s more, the rates are only payable for a limited time – typically 12 months.

To access the best rates you’ll need to have a current account with the same provider – First Direct, HSBC, M&S Bank and Nationwide all have regular savings accounts that pay 5% for 12 months.

Current accounts

Despite a series of rate cuts on popular interest-paying current accounts, many still offer meaningful returns, albeit only on small balances. You’ll also need to make sure you pay in the required minimum monthly amount to qualify for interest.

Nationwide’s FlexDirect account pays 5% AER on balances up to £2,500 for the first 12 months, generating a maximum return of £125. The rate will drop to 1% AER after that.

TSB’s Classic Plus account pays 3% AER on balances up to £1,500.

Find out more: see our full review of the best high-interest current accounts

Savings account deals

Instant-access savings accounts

The best instant-access savings rate in our tables is 1.1% AER, offered by RCI Bank. This provider is not covered under the Financial Services Compensation Scheme, although up to €100,000 of your savings is protected by the French equivalent.

The Nottingham Building Society and West Bromwich Building Society offer the next best rates in our table, both paying 1.05% AER.

One-year fixed-rate savings accounts

If you’re willing to tie up your savings for a year, the best rate in our tables is 1.65% AER, offered by United Trust Bank. Click the link to find out more about this account.

OakNorth Bank offers the next best rate in our table, at 1.62% AER.

Two-year fixed-rate savings accounts

United Trust Bank also offers the best two-year fixed-rate savings account in our tables, paying 1.8% AER. Click the link to learn more about this account.

Atom Bank and Paragon Bank offer the next best rates in our table, both at 1.7% AER.

Three-year fixed-rate savings accounts

AgriBank and Atom Bank offer a market-leading 1.9% AER. Click to find out more about the AgriBank 3-year Bond and the Atom Bank 3-year Fixed Saver account.

Ikano Bank and Vanquis Bank offer the next best rates in our table, both at 1.85% AER.

Four-year fixed-rate savings accounts

Vanquis Bank offers the best rate in our four-year fixed-rate savings account table, paying 2.1% AER.

Ikano Bank and Paragon Bank offer the next best rates in our table, both at 2% AER.

Five-year fixed-rate savings accounts

The best rate on a five-year savings account available in our tables is 2.3% AER, offered by Milestone Savings. Click the link to learn more about this 5-year Fixed-Rate account.

Atom Bank and Secure Trust Bank offer the next best rates in our table, both at 2.25% AER.

Which? Money Compare table: fixed-rate savings accounts – compare hundreds of fixed-rate deals

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